Another Corus ally faults deal

TNN|

Oct 27, 2006, 02.04 AM IST

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MUMBAI: Though Tata Steel's $8.1-bn offer to take over Corus was met with silent acceptance from British business houses, first signs of 'disappointment' are now creeping in. Anthony Bamford, a senior British industrialist and head of JCB, a construction machinery company, said he was "saddened and disappointed" with Corus' acceptance of Tata Steel's offer.

JCB holds 2% stake in Corus.Agency reports on Thursday quoted him as saying, "I am saddened and disappointed that Corus is failing to lead the consolidation of the global steel industry, and instead appears eager to rush into the hands of Tata, a significantly smaller steelmaker than itself."

This is the second such comment within a week of the mega deal. Earlier, the biggest shareholder in the British steelmaker, Standard Life Investments (SIL), was reported to have opposed the deal, asking for a higher price than the 455-pence-per-share offered by the Indian company. SIL owns 7.9% of shares in Corus. Another major institutional investor in the Anglo-Dutch company is Legal and General Investment Management with a 3.8% stake.

Mr Bamford's statements are significant because JCB is one of the oldest customers of Corus and annually sources about 3,00,000 tonnes of steel from them.

Corus shareholders are set to respond to the deal and sources say Tata Steel may send an offer letter soon. Mr Bamford further said, "Corus should be using its strong profitability to grow the business by buying smaller steelmakers in India, Brazil or elsewhere. Why isn't it more ambitious? Selling out means British manufacturing will now be the loser.

A successful bid by Tata will see Europe hand over control of a valuable manufacturing asset and at a price that is too low."Incidentally, a scribe at the London-held press conference by Tata Steel and Corus last week had aired questions reflecting similar sentiments. Responding to one such query, Corus chairman Jim Leng had asked shareholders to see the deal from a "commercial" perspective rather than a nationalistic one.

Investor sentiment reflected in Corus shares, which at the time of going to press, was down 50 pence at 465p per share. Tata Steel shares also saw a drop by 1.4% at Rs 501.3 on Thursday when the Sensex saw a marginal rise of 6%. Fortunately for Tata Steel, the counter bids by Russian and Brazilian companies are yet to materialise.

Neither bid has ignited any patriotic fervour that was seen in the Mittal-Arcelor merger.The board of the Indian steel major will meet on October 30 to announce financial results for the second quarter. It couldn't be ascertained if any other issue will be discussed. The Tata Steel spokesperson was unavailable for comment.